Weak gold price spells loss for Newmont

Denver — Despite strong cash flow, Newmont Mining (NEM-N) incurred a loss of US$18.7 million (or 11 per share) in the third quarter, compared with a loss of US$39 million (23 per share) in the corresponding period last year.

The major blamed the loss on weak gold prices and several non-recurring items, including a settlement in the long-standing litigation over ownership of the Yanacocha gold mine in Peru, and an accrual related to a mercury spill near that operation.

Newmont produced a total of 1.1 million oz. in the quarter, nearly 100,000 oz. more than in the year-ago period. The average realized gold price increased $6 to US$277 per oz., while total cash costs held firm at US$175 per oz.

North American mines accounted for 768,000 oz. of that total (18% higher than a year ago) at a cash cost of US$210 per oz. (2% lower). The rise in output is chiefly due to the Deep Post pit in Nevada.

Overseas operations contributed 390,600 oz. at a cash cost of US$99 per oz., compared with 393,600 oz. at US$108 a year ago. The difference is attributable lower grades and an unusually wet September at the Yanacocha mine, which consequently produced less gold than expected.

Newmont’s cash flow during the quarter was US$95.9 million (57 per share), or 145% more than a year ago.

“We expect an excellent fourth quarter and remain on target to produce a record 4.8 million oz. gold in 2000 at a total cash cost of US$173 per oz.,” Chairman Ronald Cambre says.

In the meantime, Newmont is moving ahead with its proposed merger with Battle Mountain Gold (BMG-N). The transaction is expected to be completed by year-end.

At the end of the quarter, Newmont had cash and equivalents of US$48.3 million, with a long-term debt of US$1.09 billion.